moved that Bill C-78, an act to establish the Public Sector Pension Investment Board, to amend the Public Service Superannuation Act, the Canadian Forces Superannuation Act, the Royal Canadian Mounted Police Superannuation Act, the Defence Services Pension Continuation Act, the Royal Canadian Mounted Police Pension Continuation Act, the Members of Parliament Retiring Allowances Act and the Canada Post Corporation Act and to make a consequential amendment to another act, be read the third time and passed.
Mr. Speaker, Bill C-78 is a necessary piece of legislation which makes major changes to public sector pension plans. This bill substantially alters our pension plans as we know them today.
I would like to start by addressing the beneficiaries of those plans, who may have heard, among the various arguments advanced in recent weeks, a number of falsehoods surrounding the amendments the government is planning to make. Please allow me to set the record straight.
First, our employees must know that all the benefits for which they have paid throughout their careers will be fully guaranteed and maintained. There will even be certain improvements under the new legislation, which will result in better benefits.
At the end of the day, the government decided to act, its primary interest being to safeguard and improve the financial future of these pension plans. Our employees and those who have retired from the federal public service can thus be assured of the future of their pension funds.
There is no doubt in my mind that our current public sector pension plans must be brought in line with the new realities.
We have been and always will be concerned about fairness both toward our current and past employees and toward taxpayers. Historically, under the Public Service Superannuation Act, the government and its employees have shared the cost of the pension plan according to a 60:40 ratio. The increase in CPP contributions has gradually changed this ratio which is now 70:30 and which would have reached 80:20 in 2003 if the government had not decided to act now.
The government really wants to ensure the long term viability of these pension funds and to improve their financial management. The government also wants to ensure a more balanced relationship between employees' contributions to these funds and those put in by the government as the employer. This is a question of justice and equity for employees and for Canadian taxpayers, which is the very reason behind Bill C-78.
The three current pieces of legislation that govern public sector pension plans impose limitations that other governments and certain private sector firms have already eliminated. We are a government that is respectful of the individual and, as such, we must be fair and equitable with all.
It is difficult to justify that government employees are sheltered from increases to CPP while other citizens are not. It is also difficult to justify that Canadian taxpayers must continue to pay a larger and larger share of the pension plans of government employees as well as finance any possible deficits in those plans.
It is also unfair that taxpayers should be paying more and more to provide for their own retirements while public servants are paying less and less. The principle of fairness must be the same for our employees as it is for Canadian taxpayers.
In recent years, the pension plans of the public service, the Royal Canadian Mounted Police and Canadian Forces have accumulated a surplus of approximately $30 billion.
I have said it before and I will say it again: this surplus belongs to the taxpayers of Canada since they have covered and absorbed all the deficits incurred by the pension funds of government employees. They have assumed all the risks.
Bill C-78 will thus make it possible to take into account both surpluses and deficits and will establish mechanisms for disposing of future surpluses. Existing surpluses will gradually be reduced to an acceptable level over a period of up to 15 years.
What would happen in future if surpluses were to accumulate? It would be the Treasury Board's responsibility to determine how those surpluses would be used; for example, by a reduction of contribution rates.
Naturally, if there were to be a mutual agreement to share the risks with employees, I am certain we could establish a co-management arrangement to share any potential surpluses in the future.
Bill C-78 will also ensure the long-term financial viability of our employees' pension funds by establishing a public sector pension investment board, which will be charged with investing future employer and employee contributions in the financial markets. Investing contributions in diversified portfolios will yield a better rate of return, thus guaranteeing a better future and controlling increasing costs.
This new board will be completely independent of the government and the participants in these plans. It will thus be entirely free in its investment decisions. Other public sector pension plans in Canada have already been investing contributions in the financial markets. This board will be of benefit to our employees.
Our employees have nothing to lose and everything to gain with this new organization. If the performance of the investments I have just spoken of fail to meet expectations, I can assure employees that they would receive the same pension as that provided for under the plan to which they have contributed during their careers.
The government guarantees the integrity of the benefits provided through its employees' pension funds. Bill C-78 re-establishes equity between taxpayers and government employees in terms of the funding of these pension plans. It strengthens the long term viability of the plans and will endeavour to reduce the costs for all contributing members.
Bill C-71, the Budget Implementation Act, also proposes improvements to the Public Service Superannuation Act, the Canadian Forces Superannuation Act and the Royal Canadian Mounted Police Superannuation Act.
In the future pension benefits will be computed on the basis of the average annual salary for the five best consecutive years covered, compared to six years under the current plan. In simple terms this means better benefits for our employees.
Bill C-78 sets out a series of technical amendments, which will enhance the benefits associated with the pension plans of federal employees. It will also reduce the contribution rate for the supplementary death benefit plan and the employees' group insurance plan and will increase benefits.
Bill C-78 will also grant survivor benefits to same sex partners. The Government of Canada would thus be making the provisions of these pension plans similar to those of several public and private sector plans. For example, I am thinking of the Ontario municipal pension employees retirement plan, or similar plans which have been modified in New Brunswick or in Saskatchewan. I can even think of private companies like Sears, Dow Chemical or Shell.
Furthermore, I would note that the approach adopted in Bill C-78 is supported by the recent Supreme Court of Canada decision in M vs. H.
I am satisfied that the changes we are planning to make to the three public sector pension plans are realistic and fair.
I would also remind the House that we consulted with our partners, including the unions, over a long period and were unfortunately unable to reach an agreement on the reforms that needed to be undertaken.
For a long time we have needed to take action and we have taken action. This bill is fair and equitable for both the beneficiaries of these plans and for Canadian taxpayers. This bill will modernize and improve public sector pension plans. I am also fully satisfied that the majority of government employees firmly believe that the government is acting to protect and improve their future retirements.
I hope that all members of parliament will see the necessity for the government to act now, will support the government and will vote in favour of this legislation.